• Meaning of passive income

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    Dividends

    Passive income includes all dividends. The term dividend includes:

    • unit trust dividends received from a corporate unit trust or a public trading trust
    • a distribution made by a liquidator which is deemed to be a dividend.

    Interest income

    Passive income includes tainted interest income, which is all interest income except for interest derived through an offshore banking unit. It also specifically includes:

    • amounts in the nature of interest - for example, discounts
    • income earned from hire purchase and other property financing transactions
    • accrued interest on discounted and other deferred interest securities issued after 16 December 1984
    • interest deemed to be derived where a CFC assumes the rights of a lender through the purchase of securities through a secondary market
    • factoring income.
    Last modified: 05 Dec 2006QC 18000